The property insurance industry in the Asia-Pacific (APAC) region is projected to grow at a compound annual growth rate (CAGR) of 11.3% from $92.3 billion in 2023 to $141.8 billion in 2027, in terms of written premiums, according to GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Property Insurance Market Trends and Analysis by Region, Line Of Business, Competitive Landscape and Forecast to 2027”, reveals that the growth in the APAC property insurance industry will be supported by increasing demand for policies covering natural catastrophic (NatCat) events, investments in infrastructure projects, innovations in insurance products, and regulatory developments.

Property insurance in APAC is concentrated among the top three markets – China, Japan, and Australia, which are estimated to account for a collective share of 76.0% of the region’s written premiums in 2023.

Manogna Vangari, Insurance Analyst at GlobalData, comments: “APAC property insurance growth is expected to outpace global growth of 6.5% over 2023-27, driven by disciplined underwriting practices, and frequent NatCat events that are leading to an increase in premiums for fire and home multi-risk property insurance classes.”

China is the leading regional market, accounting for 35.3% share of the APAC written premiums in 2023 with a strong growth outlook over 2023–27. It is expected to grow at a CAGR of 14.4% over the next five years, supported by the increased demand for policies covering NatCat events and positive regulatory developments.

In China, the role of parametric insurance is expected to gain traction beyond agriculture as an affordable and sustainable form of insurance. In April 2023, the China Banking and Insurance Regulatory Commission issued a notice for all insurance companies to expand agricultural insurance coverage and products, improve the efficiency of agricultural-related insurance underwriting and claim settlement, and research and develop personal insurance products that meet the needs of farmers.

Vangari continues: “Since then, insurers have expanded parametric insurance from agricultural insurance (mostly to cover losses caused by drought) to earthquake insurance, business interruption insurance, renewable energy insurance against weather risks, and insurance against tropical cyclones.”

Japan is the second largest market, accounting for 25.1% share of written premiums in 2023. Property insurance in Japan is expected to record a CAGR of 9.1% over 2023–27, supported by the rise in fire insurance premiums amid increased climate risks that will drive property insurance growth.

Property insurance in Japan will also benefit from the growth in the construction, and energy sectors, and investments in large infrastructure projects. According to the Statistics Bureau, the total value of contracts received for construction grew by 3% year-on-year in the first five months of 2023.

Australia is the third-largest regional market, with a 15.6% share of the region’s written premiums in 2023. Property insurance premiums in Australia are expected to grow at a CAGR of 11.7% over 2023–27, backed by a rise in fire and home multi-risk insurance premiums.

According to the Australian Prudential Regulation Authority, the average premiums for property classes such as home multi-risk, fire, and industrial special risks insurance increased by 10-18% from July 2022 to June 2023. Australian insurers have raised premiums or minimized their exposure to tackle unsustainable losses and rising pressure from reinsurers.

Vangari adds: “New business opportunities and support from the government are also expected to support property insurance growth in Australia. The Australian government introduced the decennial liability insurance product in October 2022, which will create new business opportunities for insurers. The product covers critical parts of a residential apartment, including fire systems and waterproofing, to help owners maintain the building.”

India and New Zealand are the remaining countries in the top five regional markets with a respective share of 9.7% and 3% of the region’s written premiums in 2023. Property insurance written premiums in India are expected to grow at a CAGR of 8.7% over 2023–27, while written premiums in New Zealand are expected to grow at a CAGR of 10.6% over 2023–27.

Vangari concludes: “Growing demand in the construction and energy sectors and rising premium prices are expected to support property insurance growth in the APAC region over the next five years. However, portfolio adjustments to limit high severity loss exposure and maintaining profitability are expected to remain a key focus for APAC property insurers.”